U.S.-based Identive Group reported an 81% year-over-year growth in transponder sales but a loss for the quarter overall, in preliminary second quarter results the vendor released Friday.
Based on Identive’s preliminary figures, the company’s estimated second quarter revenue was $23.6 million, up slightly from the first quarter’s $21.1 million. Operating expenses continued to decrease, down 11% year over year to $11.9 million for the quarter. The company expects to report an adjusted EBITDA loss of $1 million for the quarter. Identive Group mainly supplies secure ID technology, readers and transponders.
Q2 Tag Orders Grow
In its announcement of the preliminary results Friday, Identive CEO Ayman S. Ashour spoke of the importance of “capturing share in new, potentially hyper-growth opportunities including NFC (and) cashless payments,” and NFC tags made up 25% of the company’s quarterly total of 46 million RFID tag and inlay shipments.
The company’s release mentioned “a number of large orders for NFC inlays and tags to enable M2M electronic games and phone-based applications, such as access and payment” as a contributor.
Identive highlighted “machine-to-machine” applications as a driver of the company’s NFC sales during its first quarter earnings conference call in May.
Following the May conference call, an Identive spokeswoman told NFC Times that the “use of NFC in electronic game pieces is allowing far more people to actually have an experience using NFC. Although it is in more phones, there still aren't a lot of applications that the average consumer knows about or has a chance to use.”
Such video games as Activision’s popular Skylanders and Skylanders Giants titles use NFC to connect real-world toys with the virtual world in the game. When players place the toys on an NFC reader, its software reads the chip and activates a digital version of the figure in the video game.
Two other video games using NFC-enabled toys, Pokémon Rumble U and Disney Infinity, are both scheduled for release in August. Identive has so far declined to confirm publicly that it supplies tags for any of the titles.
Identive entered the second quarter of 2013 with an order backlog totaling $22 million, $5 million to $8 million of which consisted of NFC orders. “This is the highest order book we've ever had as Identive, and it comes from a far wider base of growth markets,” said Ashour at the time.
In April, Identive announced that it had received an order for 3 million NFC Forum Type 2 tags, with ICs from NXP’s NTAG line, for a retail project in France. The first 800,000 of those tags shipped during the second quarter of 2013 as part of a large-scale rollout of NFC-enabled electronic shelf labels by France-based Store Electronic Systems. The rollout will involve several million labels at eight retail chains in four European countries, including seven E.Leclerc hypermarkets in France.
At the same time, Identive announced an order for one million of its “Tag-on-Metal” stickers for a mobile banking and payment project in Africa.
With the NFC tag orders, as well as other RFID orders, Identive says that its transponder business is operating at full production capacity. During his first quarter remarks, Ashour had mentioned that the company would seek ways to increase that production capacity and predicted that it would remain at 100% for “the foreseeable future.”
RFID transponder sales, which include NFC, were up 50% year over year in the second quarter of 2013, with 2013 year-to-date shipments already matching the company’s total shipments for all of 2012.
But the performance of its tag business was not enough to keep Identive in the black.
The company said its $1 million loss in EBITDA was more than the company’s target of between $0.5 million loss and $0.5 million profit. In the first quarter, Identive reported a net loss of $4.8 million, after having finished the last quarter of 2012 with its first, albeit small, net quarterly profit since 2008. In its release Friday, Identive attributed the losses in part to the impact of U.S. federal budget cuts on the company’s sales in access control and security technology.
The company will hold a conference call to discuss its second quarter earnings on Aug. 13. In the meantime, it said the results released Friday are subject to further review and completion by the company and its auditors. Identive has not yet commented on why it chose to release preliminary results in advance of the call.